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Community Right To Buy Land: Proposed Reform

Community Right To Buy Land: Proposed Reform

The Community Empowerment (Scotland) Bill is currently progressing through the Scottish Parliament. The Bill covers a range of topics, but the proposed changes to the Community Right to Buy regime are of particular note for landowners.

Currently, Part 2 of the Land Reform (Scotland) Act 2003 provides that a community body may apply to register an interest to buy land if there is a “substantial connection” between the community and the land, demonstrable support within the community and the acquisition of the land would promote sustainable development of the area. Registration of an interest in land has the effect of prohibiting the owner from selling without first giving the community body the option to purchase at market value.  Urban property is presently excluded from the regime.

The statistics show that there have been relatively few applications by community bodies culminating in a successful purchase. The policy memorandum accompanying the Bill states that the aim is to remove some of the barriers to the exercise of the right to buy and “empower community bodies through the ownership of land and buildings.” The agenda seems laudable: community ownership of assets, economic growth through regeneration and sustainable development of land.

The Bill provides that the procedure to exercise the existing right to buy will be simplified. The constitutional requirements for qualification as a “community body” eligible to exercise the right to buy will be relaxed. In future, a community body need only establish that they have a “connection” with the land in question, rather than a “substantial connection”. The timeframe to complete the purchase will be extended from 6 to 8 months.

The right to buy will no longer be restricted to rural land and will extend to all land in Scotland, save for certain limited exceptions, such as land on which an individual’s home is situated and minerals which are reserved to the Crown.

The Bill goes further and creates an entirely new right to buy land classed as “wholly or mainly abandoned or neglected”, if it can be demonstrated that the purchase of the land by the community body would be in the public interest. In deciding whether to consent to the application, the Scottish Ministers must take account of comments from the owner of the land and the wider community. One of the criteria is that the community body attempting to purchase must have already unsuccessfully attempted to reach an agreement with the landowner to purchase the land. So in contrast to the existing community right to buy, which may only be exercised if the land is put up for sale, abandoned or neglected land may be purchased by a community body despite the owner being unwilling to sell.

Giving communities a stake in the future development of their area, to realise the full economic and social potential of the land, is a commendable objective. It is true that on occasion, an owner of neglected or poorly maintained land who is unwilling to sell may impede regeneration, and such land can be a blight on the amenity of the community.

However, property law must balance the rights of landowners against the interest of the wider community. It is concerning that the draft Bill does not define what land will qualify as “abandoned or neglected”, but merely provides that the criteria will be set out in future regulations. Only a few limited exclusions are set out. It is often the case that land and which appears to be unused or “neglected” is in fact designated for future development, or has been left in its natural state for environmental reasons. It would have been preferable for detailed criteria to have been set out at the consultation stage.

Whilst there is an argument that community led regeneration of land may boost the local economy, it is also possible that the extension of the community right to buy may create uncertainty among landowners as to whether they may be forced to sell their asset at an unacceptable rate of return, thus discouraging investment.

Although the Bill provides for an independent valuation to be carried out to determine the sale price, landowners could still find themselves out of pocket, for example due to tax consequences or negative equity. The Bill does contain provision for compensation to be paid to landowners for “loss and expense”, but these sections of the Bill lack detail and it is unclear what losses will be recoverable.

The Bill will be subject to change as it passes through Parliament. If it is to be enacted, hopefully the points highlighted here will be considered further before the legislation is finalised.

Laura Hay
Associate

LChalmers